Empirical Capital Structure: A Review

Christopher Parsons and Sheridan Titman

Foundations and Trends(R) in Finance, 2009, vol. 3, issue 1, 1-93

Abstract: This survey provides a synthesis of the empirical capital structure literature. Our synthesis is divided into three parts. The first part examines the evidence that relates to the cross-sectional determinants of capital structure. This literature identifies and discusses the characteristics of firms that tend to be associated with different debt ratios. In the second part, we review the literature that examines changes in capital structure. The papers in this literature explore factors that move firms away from their target capital structures as well as the extent to which future financing choices move firms back toward their targets. Finally, we complete our review with a set of studies that explore the consequences of leverage, rather than its determinants. These studies are concerned with feedback from financing to real decisions. For example, we explore how a firm's financing choices influences its incentive to invest in its workers, price its products, form relationships with suppliers, or compete aggressively with competitors.

Keywords: Capital structure; Econometric specification; Leverage targets; Finance; Econometrics; Corporate finance (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://dx.doi.org/10.1561/0500000018 (application/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:now:fntfin:0500000018

Access Statistics for this article

More articles in Foundations and Trends(R) in Finance from now publishers
Bibliographic data for series maintained by Lucy Wiseman ().